No. 3-07-0345
_________________________________________________________________
Filed May 28, 2008
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 2008
In re MARRIAGE OF ) Appeal from the Circuit Court
LYNETTE KATHERINE SCHURTZ, ) of the Tenth Judicial Circuit
) Peoria County, Illinois
Petitioner-Appellee )
Cross-Appellant, )
) No. 92-D-49
and )
)
JOHN BARTON SCHURTZ, )
) Honorable
Respondent-Appellant ) Stephen Kouri
Cross-Appellee. ) Judge Presiding
_________________________________________________________________
JUSTICE LYTTON delivered the Opinion of the court:
_________________________________________________________________
In 1993, John and Lynette Schurtz entered into a marital
settlement agreement, requiring John to divide his retirement
benefits with Lynette. In 2004, John stopped working and began
receiving disability benefits. When John refused to divide his
benefits with Lynette, she filed a petition for rule to show cause
and to enforce judgment. The trial court granted the petition.
Lynette then filed a petition for attorney fees, which the trial
court denied.
John appeals, arguing that the trial court erred in ordering
him to pay benefits to Lynette. Lynette cross-appeals, arguing
that the trial court erred in denying her requests for attorney
fees and prejudgment interest. We affirm.
John and Lynette Schurtz were married in 1962. John became a
firefighter for the City of Peoria soon thereafter. After 30 years
of marriage, Lynette filed a petition for dissolution of marriage.
In 1993, the trial court entered a judgment for dissolution that
incorporated a marital settlement agreement. Section 6j of the
settlement agreement provided in pertinent part:
"As a part of the distribution of marital property, the
parties will divide evenly JOHN B. SCHURTZ' accrued
retirement pension benefits as of September 16, 1993, if,
as, and when received by him. * * * In the event a
Qualified Domestic Relations Order is lawfully able to be
entered in the future with regard to said pension, each
party will cooperate to the entry thereof."
In late 2004, when John was 62 years old, he became unable to
work as a firefighter. He applied for occupational disease
disability benefits. The City of Peoria Fireman's Pension Board
approved John’s application for benefits. John began receiving
$4,374.00 per month in disability payments.
In February 2005, Lynette's attorney sent John a letter
demanding that he consent to the issuance of a Qualified Domestic
Relations Order (QDRO) on Lynette’s behalf so that she could
receive a portion of John’s disability benefits in accordance with
the marital settlement agreement. When John refused, Lynette filed
a Petition for Rule a Show Cause and Enforce Judgment.
At hearings on Lynette’s petition, John testified that he did
not intend to retire when he went on disability and would return to
work if he were physically able. However, he admitted that he
signed a "Change of Status" form from the City of Peoria that
indicated his "purpose of leaving" as "retired." He admitted that
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he may stay on disability forever, but he may elect to receive
retirement benefits if that becomes more financially advantageous
to him.
After hearings on Lynette’s petition, the trial court granted
Lynette's rule to show cause, holding that John's disability
pension was a retirement pension for purposes of section 6j of the
marital settlement agreement. Thereafter, Lynette filed a petition
for attorney fees, arguing that John's failure to consent to the
issuance of a QDRO was "without cause or justification."
In a supplemental order, the court ordered John to pay Lynette
$1,534.34 of the $4,374.00 in benefits he received monthly and
$41,980.08 for past due amounts. The court did not require John to
pay prejudgment interest on the past due amounts but ordered that
he pay interest of 9.0% per annum on any future delinquent
payments. The court denied Lynette’s request for attorney fees,
finding that John had a good faith justification for failing to pay
Lynette prior to the court ordering him to do so.
I.
The main objective when construing a marital settlement
agreement is to give effect to the purpose and intent of the
parties at the time they entered into the agreement. In re
Marriage of Davis, 286 Ill. App. 3d 1065, 1066, 678 N.E.2d 68, 69
(1997). Where the language of the agreement is clear and its
meaning is unambiguous, courts must give effect to that language.
Davis, 286 Ill. App. 3d at 1066, 678 N.E.2d at 69. However, if the
agreement is ambiguous, the court must ascertain the intent of the
parties by examining the facts and circumstances surrounding the
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formation of the agreement. Davis, 286 Ill. App. 3d at 1067, 678
N.E.2d at 70.
When a pension plan provides disability benefits as well as
retirement benefits and the marital settlement agreement refers
only to "retirement" benefits and is silent as to disability
payments, a court may reasonably interpret the agreement in one of
two ways: (1) as a grant to the ex-spouse of a portion of any
benefits received under the pension plan, or (2) as limiting the
ex-spouse's interest in the pension plan to normal, age-related
retirement benefits. See Davis, 286 Ill. App. 3d at 1067, 678
N.E.2d at 70. How the court interprets the agreement depends on
the facts and circumstances of the case. See Davis, 286 Ill. App.
3d at 1067, 678 N.E.2d at 70; Camp v. Hollis, 332 Ill. App. 60, 74
N.E.31 (1947) (when an agreement is susceptible to two
constructions, the interpretation that makes a rational and
probable agreement under the circumstances is favored).
When a disabled ex-husband is not yet eligible for retirement
pay, a marital settlement agreement entitling the ex-wife to
"retirement" benefits should not be interpreted to grant her a
share of her ex-husband’s disability income. See Davis, 286 Ill.
App. 3d 1065, 678 N.E.2d 68 (ex-husband became disabled before the
normal retirement age and would begin receiving retirement
benefits, which ex-wife would share, when he turned 60); In re
Marriage of Belk, 239 Ill. App. 3d 806, 605 N.E.2d 86 (1992) (ex-
husband began receiving disability pension at age 41, before he was
eligible for regular retirement pay). This interpretation is
reasonable because the disability pay is meant to replace the
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disabled ex-husband’s income, not act as retirement pay. See
Davis, 286 Ill. App. 3d 1065, 678 N.E.2d 68;Belk, 239 Ill. App. 3d
806, 605 N.E.2d 86
However, when an ex-husband is entitled to receive retirement
pay and is receiving disability income instead, a settlement
agreement providing the ex-wife a portion of retirement benefits
"can be reasonably interpreted in only one way -- the petitioner
[should] be paid the percentage of what would be the normal
retirement benefits, whether respondent [is] paid normal retirement
benefits or disability retirement benefits." In re Marriage of
Marshall, 166 Ill. App. 3d 954, 962, 520 N.E.2d 1214, 1219 (1988).
It is not the label of the payments (i.e. disability or retirement)
that controls. See Marshall, 166 Ill. App. 3d at 962, 520 N.E.2d
at 1219. "To allow a technicality, i.e., a disability benefit
instead of a regular retirement pay, to defeat the terms of the
agreement could hardly have been the intention of the parties."
Marshall, 166 Ill. App. 3d at 962, 520 N.E.2d at 1219.
Here, John was eligible for retirement pay when he began
receiving disability benefits. See 40 ILCS 5/4-109(a) (West 2004).
He elected to receive disability payments instead of retirement
benefits. The amount of disability pension John receives is exactly
the same as he would receive as a retirement benefit. See 40 ILCS
5/4-110(2) (West 2004). Although John’s payments are labeled
"disability payments," they are, essentially, retirement benefits.
His disability benefits do not serve as income replacement, but as
a replacement for his retirement pension. Thus, the trial court
properly found that Lynette was entitled to share in the payments.
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See Marshall, 166 Ill. App. 3d at 962, 520 N.E.2d at 1219.
II.
Section 508(b) of the Marriage and Dissolution of Marriage Act
(Act) provides:
In every proceeding for the enforcement of an order or
judgment when the court finds that the failure to comply
with the order or judgment was without compelling cause
or justification, the court shall order the party against
whom the proceeding is brought to pay promptly the costs
and reasonable attorney’s fees of the prevailing party.
750 ILCS 5/508(b) (West 2004).
A court may deny attorney fees and costs where the failure to pay
was justified or not willful and wanton. In re Marriage of
Michaelson, 359 Ill. App. 3d 706, 715, 834 N.E.2d 539, 547 (2005).
We will not reverse a trial court’s decision to deny attorney fees
unless the trial court abused its discretion. Berger v. Berger,
357 Ill. App. 3d 651, 662, 829 N.E.2d 879, 889 (2005).
A court may award prejudgment interest when warranted by
equitable considerations and disallow it where it would not comport
with justice and equity. Regnery v. Meyers, 287 Ill. App. 3d 354,
366, 679 N.E.2d 74, 82 (1997). A decision regarding prejudgment
interest is within the trial court’s discretion and will not be
disturbed on review absent an abuse of discretion. See Jones v.
Hryn Development, Inc., 334 Ill. App. 3d 413, 419, 778 N.E.2d 245,
250 (2002).
Here, Lynette sought attorney fees and prejudgment interest,
arguing that John’s refusal to consent to the qualified domestic
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relations order was without cause or justification. The trial
court denied Lynette’s requests, explaining:
"The issues presented by this dispute were difficult and
unique. While on the one hand Respondent candidly
testified that he did not want Petitioner to share in his
monthly check, the legal stance he advanced was not
without an arguable basis. Accordingly, the court finds
that there was a good faith justification for failure to
pay thus far. Accordingly, no legal fees under Section
508(a) or (b), or ‘prejudgment’ interest, shall be
awarded."
The trial court did not err in denying Lynette attorney fees
under section 508(b) of the Act. John had a good faith argument
that he was not required to pay Lynette any portion of his
disability payments based on a narrow reading of the marital
settlement agreement. See Davis, 286 Ill. App. 3d 1065, 678 N.E.2d
68; Belk, 239 Ill. App. 3d 806, 605 N.E.2d 86. Although the trial
court ultimately found that John’s interpretation of the marital
agreement was incorrect, it was not unreasonable. See Davis, 286
Ill. App. 3d 1065, 678 N.E.2d 68; Belk, 239 Ill. App. 3d 806, 605
N.E.2d 86. Thus, the trial court did not abuse its discretion by
denying Lynette her attorney fees.
Additionally, the trial court’s decision to deny Lynette
prejudgment interest was not an abuse of discretion. Under the
trial court’s supplemental order, Lynette received over $41,000 in
past due amounts from John and would continue to receive over
$1,500 from John each month. Since Lynette received a significant
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recovery, the trial court did not abuse its discretion in denying
her request for prejudgment interest. See Regnery, 287 Ill. App.
3d at 366-67, 679 N.E.2d at 82.
CONCLUSION
The judgment of the circuit court of Peoria County is
affirmed.
Affirmed.
CARTER, J., concurring.
JUSTICE HOLDRIDGE, dissenting in part and concurring in part:
I believe that the trial court and the majority herein would
be correct in awarding Lynette Schurtz a portion of John Schurtz’s
disability benefits were it not for the fact that disability
benefits paid pursuant to section 4-110.1 of the Illinois Pension
Code (40 ILCS 5/4-110.1 (West 2004)) are, as a matter of law, not
subject to division in a dissolution proceeding. I must therefore
respectfully dissent from the ruling upholding the division of
John’s disability pension.
The Associated Fire Fighters of Illinois and Board of Trustees
of the Firefighters’ Pension Fund of the City of Peoria, each filed
amicus curiae in this matter arguing it was the intent of the
legislature not to make disability benefits subject to payment to
an alternate payee. Both point out that disability benefits,
unlike retirement benefits, are not entitlements subject to the
discretion of the member. Rather, disability benefits are only
paid after the fiduciary board is satisfied that the rigid
requirements for awarding disability benefits have been met. Krohe
v. City of Bloomington, 204 Ill. 2d 392 (2003); Village of
Stickney v. Board of Trustees of the Police Pension Fund, 347 Ill.
App. 3d 845 (2004).
The amici also point out that the Pension Code implicitly
exempts disability benefits from distribution to a third party
payee. The Code provides for distribution of benefits to third
party payees under a Qualified Illinois Domestic Relations Order
(QILDRO). 40 ILCS 5/4-119 (West 2004), but then specifically
provides that "a QILDRO shall not apply to or affect the payment of
any survivor’s benefit, death benefit, disability benefit, life
insurance benefit, or health insurance benefit." 40 ILCS 5/1-
119(b)(4) (West 2004). Thus, the amici maintain, the express
language of the pension code excludes disability benefits from
payment to an alternate payee.
This presents a matter of statutory interpretation which
presents an issue of law to be reviewed de novo. City of Belvidere
v. Illinois State Labor Relations Board, 181 Ill. 2d 191 (1998).
While there are no cases adopting the position articulated by the
amici, I am convinced that the legislative intent is nonetheless
clear. Based upon the statutory analysis proffered by the amici,
I would find that the trial court erred as a matter of law in
subjecting John’s disability benefit to division. I would reverse
and remand on that basis.
I concur with the majority’s decision to affirm the trial
court’s denial of Lynette’s motion for attorney fees.
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